US regulators seized Silicon Valley Bank (SVB) on March 10, marking the second largest US bank failure in history and largest since the 2008 global financial crisis. In response, investors began selling off stocks of other banks with investment portfolios and clientele similar to SVB. Two days later, Signature Bank became the third largest US bank failure in history. Though the government has stepped in to ensure that depositors have access to their assets, the situation leaves many with questions about the fallout effects.
The recent events in the banking industry raise many issues for those in banking as well as for industry customers and industry participants, including:
- Liquidity issues that may impact the ability to pay employees and maintain compensation and benefit programs.
- Risk exposure related to investments made into SVB, Signature Bank, or other potentially troubled financial institutions as a plan sponsor in connection with 401(k) and 403(b) plans.
- Real estate and other loan issues, including access to capital alternatives.
- What D&O and other insurance policies cover in the event of a failure at your financial institution and challenges to your investment decisions.
- Whether disclosures about accounts at failed institutions are necessary.
- Risk exposure related to investments in shares of SVB, Signature Bank, or other potentially troubled financial institutions in connection with 401(k) and 403(b) plans.